After a 600% surge, can Zcash really challenge BTC?

Source: Pine Analytics

Original Title: ZEC Is Not Money

Translation and Compilation: BitpushNews

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My Crypto Journey and Sovereignty Pursuit

When I first entered the cryptocurrency space, I carried naive optimism, believing that this technology could fundamentally constrain government overspending and empower individuals to hold currencies beyond the control of legal authorities. It represented a form of “exit,” a way for the weak to oppose the strong, to maintain dignity and rights. This resonated deeply with my identity as an Armenian immigrant descendant—my family fleeing their homeland during the genocide and turmoil of the early 20th century. I was convinced that governments were spiraling out of control with fiscal excess, constantly devaluing fiat currencies and eroding personal freedom. Cryptocurrencies seemed like a weapon for marginalized groups, a digital safe haven to store and transfer value without permission or oversight.

However, my idealism soon collided with reality.

I learned about “on-chain analysis”: even if wallets are not directly named, funds can be tracked through public ledgers, transaction patterns, platform data, and network analysis, allowing users to anonymize themselves. While you can move funds on-chain without explicit permission from the powerful, you are still within their sight.

This discovery fostered a lasting affinity for privacy solutions, from Tornado Cash, Monero (XMR), Zcash(ZEC), Secret Network, and others. Deep down, I always kept a place for these tools, recognizing their role in restoring true sovereignty.

All of this reinforced my belief: on-chain privacy will become increasingly valuable in the future, especially amid the intensifying global surveillance in 2026, the rise of CBDCs (central bank digital currencies), and tightening regulations.

For years, I have valued privacy, but it is crucial to distinguish “practical privacy” from the “overhyped narratives” surrounding tokens like ZEC.

Zcash and Its Current Narrative

Zcash is a PoW (proof-of-work) blockchain similar to Bitcoin, but it has a core innovation: users can natively “shield” their tokens, moving them into privacy pools, enabling transactions with minimal disclosure to third parties. Using zero-knowledge proofs (zk-SNARKs), ZEC achieves transfers that are nearly untraceable when operated correctly. This is an incredible achievement; if Bitcoin had implemented this technology from the start, it might have benefited greatly. Shielded transactions hide amounts, senders, and receivers, providing a level of privacy that Bitcoin’s transparent chain lacks.

However, the current narrative driving ZEC’s premium (reflected in its astonishing 661% increase since 2025 and ongoing popularity in early 2026) is: it’s simply “the private version of Bitcoin,” a better version of Bitcoin. Supporters psychologically equate ZEC’s value with BTC, even after astronomical gains, still seeking reasons to buy.

But this comparison is false. Those promoting this view are either misleading buyers or simply don’t understand why BTC initially achieved a market cap of over $1.7 trillion.

Why Bitcoin Is Money and Others Are Not

Bitcoin’s dominance over all other cryptocurrencies (except stablecoins pegged to fiat) rests on one reason: it is money.

This status stems from a powerful synergy of first-mover advantage and path dependence. Every new ETF buyer, every whale’s daily holdings, every country adding BTC to reserves, all reinforce Bitcoin’s monetary properties. Network effects stack relentlessly: deeper liquidity attracts larger allocators, which further deepens liquidity, attracting sovereign buyers, legitimizing this asset class, and fueling the next wave of adoption. This flywheel cannot be replicated, only added to.

Much of the market cap of altcoins comes from their positioning as “silver to Bitcoin’s gold,” but this framework fundamentally misunderstands monetary competition. Money attributes follow a Nash equilibrium: coordination games produce “winner-takes-all” outcomes, where one asset emerges as the dominant store of value, while others trade based on discounted cash flows or utility. Historically, no “second-place currency” has maintained value for long. After the gold standard, silver’s monetary premium steadily eroded, and any crypto competing on “store of value” will face the same fate.

BTC’s position was established because it created a whole new asset class, at a time when the US dollar was actively degrading its monetary qualities through inflation, unprecedented monetary expansion, and policy missteps (beyond this article’s scope, but deeply felt by a generation that grew after the 2008 financial crisis). Essentially, BTC is the best and earliest “meme coin”: a cultural and economic phenomenon whose value is self-reinforcing, supported by the strongest force in markets—collective belief converging on a Schelling point. No other coin, regardless of its technical or ideological purity, can displace it. The window for monetary competition closed years ago. While privacy enhancements are desirable, they are better suited as layers on top of Bitcoin (via protocols, L2, or mixers) rather than attempts to replace it. The latter is a mistake of conflating “functionality” with “fundamentals.”

ZEC Is a Path, Not a Destination

The brilliance of privacy coins like ZEC lies in breaking the traceability of funds, whether for legitimate reasons—protecting activists, businesses, or personal finances—or for illicit purposes (though I emphasize that privacy has inherent legitimacy). However, users see ZEC as a path, not a destination. They acquire it, shield funds, then exit into BTC, stablecoins, or fiat.

On-chain data clearly reveals this. In 2025, shielded supply surged significantly, from about 11% at the start of the year to roughly 30% by year-end (around 5 million ZEC). At first glance, this supports the “ZEC is money” argument. But deeper analysis shows a different picture. According to Coin Metrics, the spike in shielded transactions is mainly driven by “shielding and unshielding” activities (transfers into or out of privacy pools), not fully shielded z-to-z transfers. In other words, users enter the privacy pools, complete transactions, then leave. They treat ZEC as a privacy tunnel, not a vault.

Further indicators from the transparent chain confirm this “circulation” dynamic. Despite a 900%+ price surge, the average daily active wallets on the transparent chain remain around 11,500, with no corresponding user explosion.

Meanwhile, the transaction volume of Monero, another major privacy coin, has not increased in tandem (remaining at 20,000–30,000 daily transactions), indicating ZEC’s movement is not driven by broad privacy sector rotation but by Zcash-specific supply squeeze—tokens entering shielded pools causing liquidity exhaustion on exchanges. CoinDesk Research notes, “Traders may be paying a significant premium,” because observable network data cannot explain this price behavior.

To qualify as “money,” an asset must be a destination: something people want to accumulate and hold long-term, storing wealth to lower their time preference. If ZEC is mainly a pipeline, then its demand ceiling is limited to specific moments of de-anonymization needs, plus the speculative premium market temporarily assigns. It cannot sustain exponential, reflexive growth like true money—more holdings lead to more holdings, deeper liquidity, institutional reserves, and cultural roots. A tool discarded after use only generates trading volume, not compound monetary premium.

While large anonymous pools (the bigger the pool, the harder to trace) have value, ZEC does not monopolize this position. Arkham Intelligence recently claimed to have tagged over 53% of ZEC transactions, linking $42 billion in trading volume to identifiable entities. This demonstrates that even shielded transactions can be deanonymized through time analysis, endpoint monitoring, and transparent entry/exit points.

Competitors like Monero (privacy by default), emerging L2 solutions (such as Aztec and Arcium), and even BTC mixers offer alternatives. Even if ZEC becomes a top privacy hub, it will not evolve into money. Buyers chasing the “private version of BTC” hype may face harsh reality: unless ZEC is competing as money, its price should not be psychologically linked to BTC. And in terms of monetary competition, BTC’s dominance is deeply rooted; ZEC entered too late.

Conclusion

Privacy is not a fleeting craze; it is an inevitable need that will define the crypto space in 2026 and beyond, as evidenced by surging adoption from institutions to retail. My family history drives me to advocate for privacy, but we must realistically view tokens like ZEC: they are powerful tools for sovereignty, but not money.

Bitcoin’s path-dependent victory ensures no challenger can replicate its monetary status. Investing in privacy is for its utility (shielding, transactions, exit), but do not confuse it with BTC’s reigning monetary throne. Those who conflate the two may face a painful hangover when narratives shift.